Dive Brief:
- Artificial intelligence is creating jobs rather than — as widely feared — killing them, Kevin Hassett, director of the National Economic Council and a top adviser to President Donald Trump, said Monday.
- “The studies that are out right now, academic studies, show that the labor market effect of AI is that firms that start using AI see their sales go up a lot, their employment go up a lot and wages go up a lot because the people are more productive,” Hassett said during an address to the Economic Club of New York.
- “The firms that don't employ AI start to fail,” he said. “The market's not showing a lot of stress from AI, but to the extent that there is stress, it's actually the workers at the firms that aren't using AI.”
Dive Insight:
Several recent polls have shown that as many as seven out of 10 U.S adults fear that adoption of AI will lead to job loss.
The Pew Research Center found in a survey conducted in June that 71% of U.S. adults believe that AI will erode employment during the next two decades.
Public anxiety about the threat to job security has grown, Pew said, noting that 73% of adults under 30 believe AI will lead to fewer jobs, a surge of 12 percentage points in two years.
President Trump has dismissed criticism of AI, particularly concerns that the technology will go rogue and cause mass disruption including death. He has also rejected calls by leading AI companies for federal regulation of the industry.
“The only control or ‘guardrails’ that AI needs is a STRONG AND SMART (High IQ!) PRESIDENT, and the U.S.A. has that, in spades!” he said in a Truth Social post.
“There is a SICK conspiracy going on against AI and Data Centers, and the only one that is happy about it is China,” Trump said. “WHOEVER WINS AI, WINS!”
Hassett compared growing use of AI — and a likely AI-fueled productivity boom — to the way widespread adoption of the internet prompted corporate streamlining and faster economic growth during the 1990s.
“The growth benefit of it is way bigger than you may think,” he said, noting a surge of investment in data centers, power systems, networking equipment, specialized semiconductors and other AI building blocks.
U.S. Investment in AI from 2025 through 2032 will total $10.3 trillion, or an average of 3.63% of gross domestic product per year, according to Stijn Van Nieuwerburgh, a Columbia University professor.
“What we're about to experience — because of the capital spending that we've been seeing — the productivity boom that's related to AI,” Hassett said.
In the absence of external shocks to the economy, annual GDP growth will likely hit 4%, he said.
The economy during the third quarter ending Wednesday will likely grow at an annual rate of 5%, according to a forecast by the Federal Reserve Bank of Atlanta.
A productivity boom is often not apparent until it is almost over because the gains from the new technology are not accurately measured in the early stages of adoption, Hassett said, citing academic research.
“We’re really, really bullish on the momentum that we have going forward,” he said, referring to AI-fueled productivity.
